Homeland Security:

Responses to Posthearing Questions Related to the Department of Homeland Security's Integrated Financial Management Systems Challenges

GAO-07-1157R: Published: Aug 10, 2007. Publicly Released: Aug 10, 2007.

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On June 28, 2007, GAO testified before the Senate Subcommittee on Federal Financial Management, Government Information, Federal Services, and International Security, Committee on Homeland Security and Governmental Affairs, at a hearing entitled, "Financial Management Systems Modernization at the Department of Homeland Security: Are Missed Opportunities Costing Us Money?" At the hearing, we discussed the Department of Homeland Security's (DHS) failed efforts to implement the Electronically Managing Enterprise Resources for Government Effectiveness and Efficiency (eMerge2) program that was expected to integrate financial management systems across the entire department. Our testimony and related report focused on (1) DHS's financial management systems modernization efforts, (2) key financial management system transformation challenges, and (3) the four building blocks that form the foundation for successful financial management system implementation efforts. This letter responds to Congress's July 10, 2007, request for responses to follow-up questions relating to our June 28, 2007, testimony. The responses are based on work associated with previously issued GAO products.

The consolidation of an entity as large and diverse as DHS poses significant management challenges, including integrating a myriad of redundant financial management systems and addressing existing and newly identified weaknesses in the inherited components. We have identified four key concepts that will be critical to DHS's ability to successfully complete the implementation of an integrated financial management system. The four concepts are (1) developing a concept of operations document, (2) defining standard business practices, (3) developing an implementation or migration strategy, and (4) defining and effectively implementing disciplined processes necessary to properly manage the specific projects. Expenditure plan reviews have proven to be an effective method of providing accountability for projects. While expenditure plans can provide valuable and useful information, additional types of information are needed to fully assess the effectiveness of the processes being used to manage a project. Further, given the importance of IT to DHS's mission performance and outcomes, it is vital for the department to adopt and employ an effective institutional approach to IT investment management. Regardless of the strategy DHS takes, sustained leadership will be key to a successful migration strategy for moving DHS toward a consolidated financial management system. Although DHS officials told us that they expect the requirements developed for eMerge2 to be salvageable and provide a foundation for its future efforts, our review found that key requirements developed for eMerge2 did not have attributes associated with good requirements developed using best practices. The attributes of good requirements include being correct, unambiguous, complete, consistent, ranked for order of importance, verifiable, modifiable, and traceable. Some of the missing attributes of the eMerge2 requirements were clarity, traceability, and completeness. Most importantly, the eMerge requirements were not based on (1) a good concept of operations, (2) reengineered business processes, and (3) an appropriate internal control structure. Ultimately, DHS must be able to provide reliable, useful, and timely financial management information so that DHS leadership and the Congress are well-positioned to make fully informed decisions to secure America's homeland. Because of the 10 material weaknesses reported by DHS financial statement auditors, DHS management, the Congress, and others do not have reliable financial data for managing the agency. It is imperative that DHS reengineer its processes across the agency as part of addressing these material weaknesses.

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